Wall Street was under pressure on Friday as President Donald Trump ramped up the heat on China. He’s calling out its early handling of the novel coronavirus — threatening economic actions as punishment.
This includes another round of possible trade tariffs and limits on U.S. capital investment flows into China. This is all it took to pull stocks back after a historic rally in April.
Adding to the pressure Friday were some disappointing earnings results and guidance from several big technology and internet stocks. As a result, a growing number of widely held stocks are rolling over badly and should be sold.
Here are four mega-cap stocks to sell now:
Stocks to Sell: Amazon (AMZN)
AMZN shares closed down 7.6% on Friday, threatening to move below their 20-day moving average for the first time since mid-March. Why? The downward move was partially a result of disappointing guidance.
But it was also thanks to reports that CEO Jeff Bezos could soon be testifying in front of Congress on concerns over Amazon’s business practices.
The company reported earnings of $5.01 per share, which was $1.22 lower than analysts expected. It also warned that the $4 billion in profit it would normally expect in the second quarter would be eaten up by pandemic-related expenses.
VZ shares are dropping back below their 200-day moving average — threatening to drop out of their April trading range. Shares have been under pressure after the company lost wireless customers.
Plus, mixed first-quarter results — with quarterly revenues of $31.8 billion — missed estimates.
So what’s up with the lost customers? Verizon reported 68,000 net phone losses, echoing reports of cell phone losses in China due to Covid-19 deaths. In the U.S. this loss likely represents a combination of deaths and cancellations due to job losses. Clearly, nothing about that is good.
Adding to the pressure on VZ stock is the ongoing closures of 70% of company stores. Unsurprisingly, these closures have led to a large decline in device sales.
Bank of America (BAC)
BAC shares are stumbling near their 50-day moving average, threatening to break down and out of their three-month uptrend pattern. A number of crosswinds are hitting banks, including reports of consumers delaying mortgage, auto and credit card payments due to job losses or other hits to income.
So what should expect when Bank of America next reports quarterly results? Analysts are looking for earnings of 29 cents per share on revenues of $20.8 billion.
When the company last reported on April 15, earnings of 40 cents per share missed estimates by 20 cents on a 1% drop in revenues.
Last on this list of mega-cap stocks to sell is Coca-Cola.
While consumer staples stocks have been relatively ebullient during the market volatility of the past few months, KO shares are showing fresh signs of weakness. The company was already facing headwinds from a secular shift away from sugary sodas made worse now by the closure of sit-in restaurants and the secondary popularity of take-out drinks compared to take-out food.
When the company reported quarterly results recently, it cited a 1% drop in net revenue as conditions worsened over the quarter. In fact, since the beginning of April, the company reported that global volumes dropped by 25%.
For now, management intends to keep its 3.6% dividend yield. But a cut cannot be ruled out.
As of this writing, William Roth did not hold any of the aforementioned securities.